Federal Government Settles Whistleblower’s Qui Tam Case

The Justice Department has announced that the City of New York Department of Education (“NY DOE”) has agreed to settle False Claims Act violations alleged in a whistleblower’s qui tam action. According to the U.S. Attorney for the Eastern District of New York, the NY DOE will pay $1.375 million to the United States to settle allegations that the NY DOE knowingly submitted claims to Medicaid that were false.

Medicaid is a government healthcare program that is jointly funded by the federal and state governments and is managed by the individual states. Medicaid is the largest source of funding for medical and health-related services for low-income individuals of any age in the United States.

According to the whistleblower, Medicaid pays the NY DOE a flat fee of $223 for each student that is provided with at least two psychological counseling sessions in one calendar month by the NY DOE. The government contends that one-half of the fee is funded by the federal government. In the event an individual student does not receive at least two psychological counseling sessions in one month, the NY DOE is not entitled to any payment.

In the qui tam complaint, the whistleblower alleged that the NY DOE knowingly submitted bills to Medicaid for psychological counseling purportedly provided to individual students, when it knew that less than two counseling sessions had been provided to those students in a one month period. The government contends that the submission of the bills to Medicaid were false claims in violation of the False Claims Act. The government alleged that the false submissions were made from 2001 to 2004. As an example, the government cited an instance where the NY DOE allegedly submitted bills for fifteen months’ worth of counseling services purportedly provided to a student, when in fact, the student only received two or more counseling sessions during three of those months.

Of the settlement amount, the whistleblower will receive $206,250 as her reward under the qui tam provisions of the False Claims Act. In addition, the NY DOE will pay attorney’s fees of $40,000.